- Explores how the ‘traditional charity model’ is disintermediated by individuals, companies and other types of charity
- Each type of disintermediation raises its own ethical and regulatory issues, which have barely begun to be addressed
- Disintermediated giving is a lot more than just donating via crowdfunding platforms.
A typology of so-called ‘disintermediated’ giving devised by a project team at the international fundraising think tank Rogare will shine a light on ethical and regulatory issues that are currently obscured.
Disintermediation occurs when charities/NPOs operating the ‘traditional charity model’ – those that mediate the transfer of resources from donors to beneficiaries, by turning resources (principally monetary donations) into goods and services to be used by beneficiaries – are disintermediated from this process (or part of it) and potentially replaced by a different entity, which might be individuals, commercial fundraising organisations, companies or non-traditional charities.
Most scholarship on disintermediated giving has focused on crowdfunding via digital platforms. However, there are many other ways that charities can be cut out of these processes, not just giving donations, but asking for them too. These are what the Rogare typology describes, with three main types and four subtypes:
Type A – The traditional charity/NPO is disintermediated, and donations/money/aid/help/support are given by the donor directly to the beneficiary/recipient.
- Type Ai – disintermediation of traditional charities by a different entity, e.g. a microlending site such as Kiva.
- Type Ai – individuals set up crowdfunding appeals to help specific, named individuals though sites such as GoFundMe.
Type B – the charity/NPO fundraising function is disintermediated, and donations arrive at the charity outside the control of its functional fundraising efforts.
- Type Bi – individuals set up fundraising (most likely via crowdfunding platforms) often without the knowledge or consent of the charity in whose aid they are raising funds.
- Type Bii – another organisation (usually, but not always, a commercial provider) sets itself up as an alternative (often a more ‘ethical’ alternative) to fundraising organised and run by a charity’s fundraising function. Type Bii often takes the form or microdonation platforms on a digital app.
Type C – the charity’s service provision is disintermediated, not just raising money (Type B) and getting money to beneficiaries (Type A). Type C disintermediation is often done by commercial organisations, but in the past has been done by the state, such as when the British government took over welfare provision from charities in the late 19th Century.
The typology is published in an open access article in the Journal of Philanthropy and Marketing, which has been co-authored by Rogare director Ian MacQuillin, Kingston University’s Rita Kottasz, Juniper Locilento from the National Arts Centre Foundation/Toronto Metropolitan University, and Neil Gallaiford of Canadian fundraising agency ST (Stephen Thomas) Ltd.
Ian MacQuillin says:
“Each of the types of disintermediation described in our typology raises questions about its practices, ethics, regulation and accountability. For example, at the start of Russia’s invasion of Ukraine, money was transferred to individual Ukrainians via Airbnb bookings. While some celebrated this as ‘democratisation’ of philanthropy, others pointed out that this could ramp up inflation by flooding a wartime economy with cash, making a bad situation worse.
“Some microlending sites intentionally position themselves as more ethical alternatives to charity because, the argument goes, it allows recipients of loans to work their way out of poverty rather than being passive beneficiaries of charity handouts. But does this ensure that all people who need help get it, not just those whose business proposition is attractive to lenders, and it might even reintroduce the notion of the ‘undeserving poor’ through the back door?
“But because we don’t have clear consensus of what we mean by disintermediation, these ethical questions often fly under the radar, and we struggle to come up with solutions because something that seems right for one type of disintermediation might be reject because it’s not appropriate for another type. This typology provides that clarity so we can better see what the ethical and regulatory issues are and so better target our solutions.”
The typology paper is the first output from Rogare’s project on disintermediation in the charity sector. Along with the paper’s four authors, the project team also contains Tum Kazunga, ceo of Build It International, and SOFII’s chair Meredith Niles. The disintermediation project will be a major focus for Rogare next year as joint project with Kingston University. Next steps will be to:
- Establish a research agenda for the ethical and regulatory issues associated with each type of disintermediation (a start on this has been made in the typology paper)
- Extend and refine the typology. Two additions we are working on are:
- Type Biii – donations are held in Donor Advised Funds
- Type D – charity/nonprofit operations in the global North are disintermediated, with donors giving directly to Southern NGOs
- Explore other ways that disintermediation can happen in fundraising and giving that are not captured by this typology
- Turn the academic paper into a more easily-accessible paper aimed at a practitioner audience
- Co-host with Kingston University a symposium on disintermediation in May 2024.
The disintermediation project will sit within a new work stream at Rogare on the philosophy of fundraising. This work stream will also house ideas on fundraising and postmodernism (the first paper – written by fundraising consultant Dr Ashley Scott – will be published in October), fundraising’s social role, and altruism in a charitable context. Full details of this new work stream will be announced shortly.
We were able to undertake this work at Rogare thanks to the ongoing generous support of our Associate Members: Bluefrog, ST (Stephen Thomas Ltd), Ask Direct, GoalBusters and Giving Architects. Their support ensures all Rogare’s reports and other outputs are freely available to the fundraising profession – https://www.rogare.net/publications.
